China demands talks on steep US tariffs

China demands talks on steep US tariffs

China has demanded talks on steep US tariffs imposed on imported solar panels and washing machines, Reuters reported on Wednesday, citing WTO filings. In the document, China reportedly said it was asserting its right as a major exporter to demand compensation, and said it believed the US measures violated numerous WTO rules. Global Times reports in its article China demands US talks: report that US President Donald Trump's administration in January approved a 30 percent tariff on imported solar panel components and a tariff of up to 50 percent on washing machines, with the rate declining over the next few years.

On January 22, South Korea requested retaliation against the US in a dispute over US anti-dumping and countervailing duties on large residential washing machines from South Korea and the request was referred to WTO arbitration, according to a press release on the WTO's website. Chinese experts said that taking the approach of seeking talks shows both restraint and wisdom. Zhang Ning, a research fellow at the Chinese Academy of Social Sciences, told the Global Times that the Chinese government is probably seeking a new, more effective method for settling trade disputes with the US. "A WTO process to settle a trade dispute between its members usually takes a long time, incurring damage to industries," Zhang said on Wednesday.

In 2002, after then-president George W. Bush imposed steel tariffs to safeguard the US steel industry, nine WTO members challenged the decision through a formal WTO dispute. The case lasted till late 2003, when a WTO ruling forced the Bush administration to withdraw the tariffs. "Talks are much more efficient, and they allow the two sides to express concerns and settle grievances," Zhang said. "Inviting the US to a negotiation table under the attention of the WTO makes the demand more compelling and it will also help ensure China has the initiative," Zhang noted. 

Escalation 

Zhang said that after a first year focusing on domestic policies such as tax reduction, there has been a shift in the Trump administration toward safeguarding US interests. After securing deals worth a record $253 billion during his state visit to China last year, Trump named China a "rival" in his State of the Union address in January. Prior to that,  Trump also said his administration was considering a big fine as part of a probe into China's alleged theft of US firms' intellectual property. Gong Ting, assistant research fellow at the China Institute of International Studies, said the reported Chinese approach showed that China's stance could still be regarded as cooperative rather than aggressive. What recent events have shown is that the issue of economic competition between China and the US has been elevated to unprecedented heights by the Trump administration, Gong said. Since August, the US has initiated various unilateral trade remedy measures based on its own domestic laws and ignoring WTO rules, Gong said. "As a result, the range of products affected by these trade remedy measures has grown and the frequency of such disruptions has increased, creating serious repercussions for bilateral trade and investment ties," Gong said.

On Sunday, China's Ministry of Commerce (MOFCOM) self-initiated an anti-dumping and anti-subsidy investigation into imports of sorghum grown in the US. The US is the world's top exporter of the grain and its exports to China are valued at $1 billion in 2017. Although MOFCOM said the sorghum probe is a separate case, Zhang said the move could be seen as a way to show the US that China also has teeth. Some analysts also pointed out that the well-being of US agricultural exports to China and the interests of US farmers will have touched a nerve in the Trump administration, as the US will have midterm elections later this year. Zhang said a probe by China into imports of US soybeans could also take place in future. 

Despite the Trump administration's "America First" trade policies, the US trade deficit rose to a nine-year high in 2017. The US trade deficit with China jumped 8.1 percent to a record $375.2 billion. "Given the deep interdependence and high complementarity between the Chinese and US economies and the fact that China and the US are each other's main export destinations, the two giants are both fragile," Gong said. "A trade war is good for neither side, and can only result in a lose-lose situation," Gong noted.

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